Crude oil benchmarks dropped Aug. 23 on markets in New York and London after China announced retaliatory tariffs on $75 billion worth of US imports, including a levy on crude oil.
“Oil prices remain caught in the crossfire as the US-China trade war continues to escalate,” said Amarpreet Singh with Barclays Capital. “The most recent escalation, coupled with the increasing likelihood of a disorderly Brexit and growing risks of a recession, implies material downside risk to our oil price forecast.”
China imposed a levy on US crude oil for the first time, with a 5% levy starting Sept. 1, which analysts call retaliation for additional US tariffs on $300 billion worth of Chinese imports announced by US President Donald Trump although he had talked of delaying those tariffs.
But in response to China’s latest tariffs, Trump issued a series of tweets threatening additional actions against Beijing and said he had “hereby ordered” US firms to look for alternatives to China.
Singh said, “Politics continues to weigh on oil demand outlook. Growing protectionism is already acting as a drag on global growth, as policy uncertainty is weighing on the business sentiment and spending, leading to a severe manufacturing slowdown across most major economies.”
Energy prices
Light, sweet crude oil on the New York Mercantile Exchange for September delivery declined $1.18 to $54.17/bbl on Aug. 23 while the October contract decreased $1.14 to $54.02/bbl.
The NYMEX natural gas price for September edged down less than 1¢ to a rounded $2.15/MMbtu.
Ultralow-sulfur diesel for September declined nearly 3¢ to $1.81/gal. The NYMEX reformulated gasoline blendstock for September decreased 2¢ to a rounded $1.64/gal.
Brent crude for October decreased 58¢ to $59.34/bbl. The November contract dropped 70¢ to settle at $58.80/bbl.
Gas oil for September decreased $9 to $556/tonne on Aug. 23.
The average for the Organization of Petroleum Exporting Countries’ basket of crudes for Aug. 23 was $59.67/bbl, down 83¢.
Contact Paula Dittrick at [email protected].
